from the not-again dept

For nearly a decade now, research firm IDC has done research for the Business Software Association (BSA), which BSA has long used to purposely mislead the press and politicians. Back in 2004, at least, the research at IDC was willing to admit that the BSA was being purposely misleading with its report, and yet it's continued to do the research and stand by it year in, year out -- despite the continued efforts to use the stats to flat out lie. As far as I'm concerned, this makes all IDC research totally suspect. Until IDC steps up and admits that the research it has put together does not say what the BSA claims it does, IDC has to be considered a joke.

This year's study, of course, was no different than in past years, so we'll point you once again to the explanation we put together in 2008 of how the BSA blatantly misleads with statistics.

Beyond the basic report, though, the BSA likes to dribble out other ridiculous claims based on the same report from May. The latest, is the blatantly false and simply laughable claim that "reducing software piracy would inject $142 billion into the global economy and create nearly 500,000 new jobs. This is wrong. Not only is it wrong, it's been widely debunked a variety of times. There are two key (but related) problems. The first, is that IDC/BSA count "ripple effects," which they don't seem to realize mean double, triple or quadruple counting the same dollars. But, more importantly, they only count those "ripple effects" in one direction. That is, they look at how they believe software companies would make more money (and then hire more people and pay more taxes) if there was less software piracy, but they don't even pretend to cover how paying for such software would mean tons of others would employ fewer people and pay less in taxes.

And, if you dig into the details, as Glyn Moody recently did (amusingly, after having to dig through many, many different reports to finally discover IDC's questionable methodology), you realize that reducing software piracy actually would probably do more harm than good for jobs and tax revenue in many areas:

One thing that is always omitted in these analyses is the fact that the money *not* paid for software licenses does not disappear, but is almost certainly spent elsewhere in the economy (I doubt whether people are banking all these "savings" that they are not even aware of.) As a result, it too creates jobs, local revenues and taxes.

Put another way, if people had to pay for their unlicensed copies of software, they would need to find the money by reducing their expenditure in other sectors. So in looking at the possible benefit of moving people to licensed copies of software, it is also necessary to take into account the *losses* that would accrue by eliminating these other economic inputs.

One important factor is that proprietary software is mainly produced by US companies. So moving to licensed software will tend to move profits and jobs *out* of local, non-US economies. Taxes may be paid on that licensed software, but remember that Microsoft, for example, minimises its tax bill in most European countries by locating its EU headquarters in Ireland, which has a particularly low corporate tax rate....

So in addition to causing money to be taken out of the country (and hence the local economy), licensed software would probably also bring in far less tax than money previously spent on local goods and services, which would generally pay the full local taxes.

Another factor that would tend to exacerbate these problems is that software has generally had a higher profit margin than most other kinds of goods: this means any switching from buying non-software goods locally to buying licensed copies of software would reduce the amount represented by costs (because the price is fixed and profits are now higher). So even if these were mostly incurred locally, switching from unlicensed to licensed copies would still represent a net loss for the local economy.

Similarly, it is probably the case that those working in the IT industry earn more than those in other sectors of the economy, and so switching a given amount of money from industries with lower pay to IT, with its higher wages, would again *reduce* the overall number of jobs, not increase them, as the report claims.

Of course, a bunch of folks have been pointing out these kinds of problems with IDC's research methods and with the BSA's claims about them for the better part of a decade. At what point do people start actually holding IDC and the BSA accountable for blatantly lying with stats?

from the lies,-damn-lies,-and-the-bsa dept

Every year, in May, we report on the latest release of the BSA's totally bogus stats about "worldwide software piracy." The stats are so laughable that even the firm that put them together for the BSA, IDC has claimed that the BSA is being misleading with the stats. In years past, we've done a detailed analysis of how the BSA's stats are misleading, but one bit of news that came out last year that was even more interesting is that in the majority of countries listed in the report, IDC does no actual surveys. Instead, it just makes up the numbers.

Glyn Moody points us to an article looking at the report's coverage of South Africa, and notes not only did IDC/BSA not survey anyone in South Africa, they're using these totally made up numbers to push for new copyright laws. As for how ridiculous the numbers are, well, here's the quick explanation:

How was the 35 percent rate arrived at? It's a guess, or rather, a combination of guesses combined with some market data and presented as a final authoritative percentage.

IDC extrapolates numbers from the 28 countries to form conclusions about the 111 that appear in the final report. But even for those countries that are surveyed, the sample size is woefully small given the number of PCs there are in the world: just 6 000 consumers and 4 300 business respondents are the world's global proxy for the final results. This works out to 150 businesses per four countries.

What's the statistical error and standard deviation of this sample? The BSA in the UK told Brainstorm that the study "is not a statistical estimation or survey that lends itself to probability analysis, so there is no standard deviation."

How then is the number of applications per South African PC calculated? Using, er, statistical analysis.

Yup. It's not statistics when that makes IDC/BSA look bad. But when you ask them how they made up their numbers, suddenly it's a statistical analysis.

But where it gets worse is that the BSA in South Africa is apparently using these totally made up "findings" to push for ever more draconian copyright law in South Africa:

Andrew Rens, an intellectual property lawyer with the Shuttleworth Foundation, is unimpressed with the proposed changes.

"Over the last five months lawyers for the BSA, as well as the BSA chairperson, have been quite vocal about changes that the BSA wants made to South African law," he says. "Those changes would shift the onus of proof so that when the BSA brings a case against someone, that person would have the onus of proof on him. They claim that these changes are necessary to combat the allegedly high level of software infringement in South Africa. But now it emerges that the claims themselves are suspect...."

The Brainstorm article includes some laughably generic "woe is the software industry" quotes from the local BSA representative. It also does a nice job debunking the ever-popular "ripple effects" that the BSA loves to tout, but only counts in one direction (ripple effects work both ways), and ignores the fact that it's often double, triple or quadruple counting the same dollars. It's nice to see more publications challenges the bogus BSA numbers. It really does make you wonder why so many press reports still quote them as if they were actually representative of something real.

from the wow dept

Want to know how to take a bad situation and make it significantly worse? Check this out. We were just discussing how the website DailyKos was going to sue its former pollster after an investigation turned up fairly compelling evidence that the data it presented was either faked or manipulated. Pretty quickly, a few folks sent over the news that Nate Silver, at the always fascinating FiveThirtyEight, (though, frankly, I miss his Baseball Prospectus work...) had received a cease & desist from R2K's law firm:

As Silver notes in his post, the letter, in part, credits statements made on the Kos website to Silver, which is just really bad lawyering. On top of that, it takes issue with some of Nate's Twitter messages, such as one where he clearly opines that R2K's results have "maginal quality." That's a clear opinion statement, and not defamatory at all. The whole thing is bizarre and clearly makes R2K look even worse -- especially considering the claims on Kos that it was given weeks to defend its research and chose not to for whatever reasons. But as soon as the reports come out demonstrating the likely problems with the research, R2K rushes out the cease-and-desist letter... and to a third party site that was just reporting on what folks on Kos had found? Yikes.

CESA took the numbers for Japanese handheld game piracy and multiplied it by four to get the worldwide numbers, because CESA "believes" Japan represents 1/4 of the market

Deviations in piracy levels in different world regions were not taken into account

Pricing for games per unauthorized copies were ALL based on the initial release price, not taking into account pricing fluctuations of games over time

In addition, I'd point out that the study apparently picked which sites to cover somewhat at random and may not accurately portray (in any way) the number of downloads. Also, there's no attempt to look at whether or not those who get unauthorized copies of some games end up buying other games as well (i.e., do they still spend the same amount otherwise -- just on different offerings?). Basically, there's very little in this study to take seriously.

from the bsa-from-the-bsa dept

Like the swallows returning to Capistrano, every May is marked by the release of intentionally misleading and bogus stats from the Business Software Alliance (or, more accurately, the Bogus Stats Alliance) concerning software "piracy." As with every other year, the stats are compiled by IDC, despite the fact that even IDC has admitted in the past that the BSA is purposely misrepresenting their findings. You would think, at some point, that IDC would stop providing numbers that are blatantly misrepresented... but I guess if the money's green, IDC will give you the numbers you want.

We've been covering these bogus stat reports for many years, providing a detailed look at how misleading the stats are, and pointing out how many in the press simply parrot the numbers without question. Two years ago, a VP at the BSA (who's now working at the Justice Department, of course) was kind enough to call me to try to explain the BSA's numbers (along with a PR person and a representative from IDC). When I challenged them on the whole "one copy equals one sale thing" they insisted that their numbers showed such a claim was accurate.

Thankfully, in the past few years, more and more in the press have started to sound skeptical of the BSA's numbers -- but it's still a minority. Last year, the BSA did a neat trick in getting some publications to run stories about the numbers, while then saying don't pay attention to the numbers as a way of fending off anyone who criticizes how incredibly misleading the numbers are.

This year, you would think the press would be extra skeptical, given that just a few weeks ago, the GAO report pointed out that these stats are totally baseless (and yes, the BSA was one of the reports they criticized). But, looking through the press coverage, most seem to be just reporting the ridiculous claims such as "$50 billion" in "losses" due to file sharing. Lots of the reports focus on "local" findings -- with local publications just covering the claims in that local country (for example, coverage in Malaysia, China, the Persian Gulf, the UK, Korea, India, Canada, etc.). Of course, in the past, even those numbers have been called into question. Last year, after people took a more detailed look at how "piracy" stats were counted in Canada, it came out that the findings were based on pure guesses. No one in Canada was surveyed. They just made up the data.

So, really, you would think that the mainstream press would at least put up some semblance of skepticism in seeing these same bogus numbers released yet again, with no serious changes to the methodology. But, for the most part the reports just repeat the BSA's talking points. Looking through the press reports, it's tough to find coverage that expresses any skepticism at all. They just repeat the numbers -- the same numbers the US government just said were bunk -- as if they were pure fact. Just a sampling: the AFP, the BBC, ComputerWeekly, Computerworld, the UK Press Association, Network World, eWeek and many, many others.

Business Week gets credit for being one of the very, very few sources that at least mentions the GAO's findings, though it does so in one sentence at the very bottom of the article. The National Journal also mentions the GAO report -- though neither seemed to ask (or get any responses from the BSA) to this rather crucial point. ITWire, at the very least, points out that the study is basically made up, noting that:

"estimates of piracy rates are based mostly on inferences and the 'gut feeling' of the BSA's research organisation IDC;

But that's about all I could find. For the most part, the press -- the one's we're told are supposed to be asking all the "tough" questions, simply reposted the BSA's press release as fact. You would think that, given that this report has come out every year for the past seven years -- and the methodology has been debunked widely time and time again -- this year by the US government -- and that the report itself admits that many of the numbers are based on hunches and guesses, that the press would stop reporting them as fact. Wishful thinking, I guess.

from the evidence-please? dept

So, the MPAA's latest target for crackdowns on camcording appears to be India. You may remember that it went through a series of questionable claims about camcording in Canada and the US, where if you looked at the math, none of it added up. Apparently, the same thing is happening in India and the reporters at the Associated Press don't feel the need to investigate bogus Hollywood numbers. In this AP report about the MPAA's new "crackdown" on camcording in India, the reporter says that camcording is to blame for 90% of "pirated" movies:

A year in the making, the coalition to fight film piracy in India will work with movie theaters to crack down on camcorder piracy -- the source of 90 percent of all pirated DVDs -- with police to tighten enforcement, with Internet service providers to fight Internet piracy and with politicians to create more effective laws.

With these big professional reporters, you might think they would try to fact check a claim like "90% of all "pirated" DVDs come from camcorded movies." They might have trouble doing that, because the actual research suggests something quite different. A study that we wrote about a few years ago found otherwise. Specifically, it found that "77% appear to have been leaked originally by industry insiders."

But, of course, we need to save the AP, because they do real fact checking, right?

from the pointless-numbers dept

The copyright industry lobbyists absolutely love to throw around the bogus and debunked stat that copyright contributes $1.52 trillion to the economy. That number is derived by taking any business that kinda sorta maybe touches copyright (including things like furniture and jewelry) and then assuming that all of the revenue they make is entirely due to copyright. Yes, that's ridiculous. But, if the copyright lobbyists are going to use such bogus methodology to push their agenda, it seems only fair for those on the other side to use the same methodology. Last week, we wrote about a biased editorial by two newspaper industry lawyers in the WSJ (who failed to note the conflicts of interest), claiming that Google violated copyright law, and attacked the concept of fair use.

In response, Ed Black, from the Computer & Communications Industry Association wrote a letter to the editor highlighting those lawyers factual mistakes as well as the importance of fair use throughout the industry (thanks to Yano for sending this in). Most of the (short) letter discusses all the wonderful things that fair use allows, and then has this wonderful line at the end:

Businesses dependent upon exceptions to copyright contribute $2.2 trillion to the U.S. economy. They are responsible for one in eight jobs, for a total payroll of $1.2 trillion in 2006. Fair use is serious business; it is the glue that holds the Internet and new technology together. It is worth protecting.

This is fantastic. Of course, the number is just as bogus as the $1.52 trillion used by copyright maximalists, but I think that if they're going to use their methodology to make such ridiculous claims, it's only fair to do the same for the contributions to the economy of exceptions to copyright, and as the CCIA clearly demonstrates, the businesses that rely on weaker copyright contribute significantly more to the economy than those that rely on copyright. Thus, by the copyright maximalists own logic (and numbers), shouldn't we be fighting to expand the exceptions to copyright law?

from the it-ain't-that-many dept

Statistics lauding the growth of the Internet in China have become so commonplace as to inspire yawns, despite breathless press reports of hundreds of millions of Chinese going online and signing up for the 'net. With the Chinese Government declaring that their internet population surpassed the US last year, it would seem that the real opportunity for expansion and growth online is not in the West, but somewhere behind the Great Firewall of China. Cue the ads for Chinese Web Hosting, Chinese Industry Liaisons, and the omnipresent legions of Chinese business agents.

Many Western technology companies have heeded that call, but have found themselves cast onto the rocks of Chinese shores including companies like Microsoft, Google, Cisco, eBay, and Yahoo! The massive markets just never seem to have materialized in the Orient for these giants, or when success has loomed on the horizon the murky Chinese bureaucracy has stepped in to snatch defeat from the jaws of victory. Partnerships have vaporized overnight, and (particularly in the case of Cisco) core Intellectual Property has been outright stolen, reverse-engineered, or redistributed. Perilous waters, indeed.

So it was with this skepticism that my friend Gersham viewed the latest piece of propaganda emerging from our friends in China that we have now reached the new height of 338 million Chinese Internet users; a 13 percent increase since the end of 2008, and just about exactly one quarter of the country's population. All of this, of course, seems to have been tabulated and distributed by the slightly inaccurately-acronymed Chinese Internet Network Information Centre (CNNIC) which, by its own admission,takes orders from the Ministry of Information Industry (MII) to conduct daily business. In fact, google Chinese Internet Traffic and you'd be hard-pressed to find data that did NOT originate from the CNNIC. Hmm. Call me a cynic.

It is likely difficult for most (any) of us to corroborate or even conceptualize these high numbers, but it seems suspicious nonetheless, particularly from a country whose median income is around $3400 and whose Per-Capita GDP is ranked 104th, right behind Armenia. In trying to substantiate this, once can point to Alexa's site rankings which currently reveal that 3 Chinese-language web sites rank in the Top 20: Search Engine Baidu (#9), IM chat and portal QQ (#14), and portal Sina.com.cn (#18). Sounds good, right? But look closely at the rankings. Baidu, an undisputed leader in Search for China, reaches 5.73% of the internet populace, whereas Google.DE (#13) reaches roughly 3% of global internet users while servicing German, Swiss and Austrian users exclusively. Combine the populations of these three countries and they don't even add up to 100 million people.

Gersham pointed me toward the Firefox Download Stats, where, as of this writing, Germans have made 4,948,666 downloads of various Firefox versions compared to only 672,972 for China. Again, Germany has a population of 82Million vs. 1.3Billion in China. As a control, Americans have downloaded Firefox 7,959,727 times as of this writing. Do the Chinese really just prefer Internet Explorer?

In January 2009, Comscore measured the Chinese internet audience at closer to 180 Million users, still an impressive 18% of the Internet population. This site quotes murky Nielsen Online data pegging Chinese Internet Users at roughly 300 Million. Beyond these hearsay reports, empirical measurements are difficult to come by.

So, let’s throw up our hands and try to reverse-engineer the data using published stats. According to June 2009 data from Comscore, Google has captured 65% or so of US Search Traffic. This made it the #1 web site in the world, with 157 Million US Visitors in June, according to Comscore. In the Chinese Market, Baidu has captured 73% of Chinese search, with Google in the Number Two spot. Yet Baidu.com barely moves the needle by comparison, according to compete.com, alexa.com, and others, hitting roughly 600,000 unique visitors per month globally. High-side estimates of the Internet's penetration in the US peg it at 72.5% of the populace, or about 220 million. This makes the data on Google's penetration vs the addressable market reasonably accurate (71% if you do the math). Following this logic, if Baidu in fact has 73% of China's purported 338 Million users, it should be ranking as the #1 web site by far, with 246 Million unique visitors per month. In fact if any of this data were true, then Chinese sites should occupy at least 4 of the Top Ten global web sites.

Whatever your opinion of Compete's and Alexa's relative methodologies, it's impossible to reconcile anything even close to the numbers coming from the Chinese Government. If that isn't good enough for you, let's turn to profits. While serving what was allegedly the world's largest internet audience, Baidu appears to be tracking to earn about $500 Million in revenue this year. Google's revenue appears to be tracking to about $23 Billion for 2009 with its pithy 157 Million unique visitors. Any way you slice it, if China's internet userbase is as large as Beijing says it is, and if Baidu's market share of that audience is what it's widely purported to be, then both the number of uniques reported by external traffic sites and the revenues reported by the public company that owns Baidu should be exponentially greater.

These stats seem to either indicate that Chinese do not use search very often, or that there just aren't too many of them heading out into the wilds of the Internet. Either way, statistics emanating exclusively from bureaucratic sources within Beijing, particularly those which seem to fly in the face of all other external metrics, are not to be believed. The thesis of this post is not to suggest that China is NOT a massive opportunity for online properties and other technology purveyors, it is simply an attempt to point out that, like in a lot of cases in dealing with the People's Republic of China, things are not what they may seem. Pay no attention to the man behind the curtain.

from the this-is-depressing dept

Every day, we see greater and greater evidence that too stringent copyright laws are harming creative efforts rather than encouraging them. The evidence is all around us and growing. But, very few in the government recognize this. They don't actually look at the real research on these things. Instead, they accept as gospel the ridiculous debunked research that comes out of the industry lobbyists who benefit the most from such protectionism that limits real and meaningful competition. And no one calls them on it. Take, for example, this Internet News report on how lobbyists for the music, movie and software industries all got together with Commerce Secretary Gary Locke, and talked up a new and misleading study from the International Intellectual Property Association that talks up the importance of copyright.

Unfortunately, the report has many, many problems. It mistakenly assumes that anything covered by copyright (i.e., any sort of creative output) is created solely because of copyright. Plenty of content/software/etc. is not created because of copyright -- but this study assumes that it is and that it needs to be protected -- even though for much of it, that's unlikely to be true. That leads to a very distorted picture, because it makes you automatically think that granting more copyright is better, even if much of that output would have been done anyway -- and even if there would have been more output without copyright. It falsely assumes that the production is because of copyright, rather than just covered by copyright.

But, with such bogus stats -- and gullible gov't officials -- it's easy to push for more protectionism and stronger copyright laws as being necessary to "protect" these industries. The industry officials went on and on at the get together, falsely blaming "piracy" for the music industry's troubles -- ignoring that real studies (i.e., not lobbyist-backed ones) are telling quite a different story. The overall industry is actually thriving -- in part because of the better ability to distribute and promote content and software at greatly diminished costs (often free). Ignoring these benefits, and treating them all as harm is a huge mistake.

But, it's these lobbyists and their bogus numbers that have the ears of our elected officials. What a shame. No one was invited to suggest the countering viewpoint or to show why the industry's numbers were clearly false. No one was there to discuss how stronger copyright actually harms creative output, and to show how these very industries have repeatedly fought against and shut down innovations that could have helped the economy. No one was there to question why politicians would simply accept industry-financed studies. And, no reporters seemed to have asked these questions, either. It's just politics and business as usual.

from the 9-out-of-10-people-disagree dept

It's pretty easy to find examples of bad statistics, whether they stem from poor data collection or interpretation. But a writer over at the BBC thinks he's fingered the real culprit: people who respond to surveys incorrectly. While on one level, his claim may have a little bit of truth to it, it really seems like an abdication of responsibility for the media, who all too often don't check out the bogus stats they cite, or swallow manipulated data without much question. Furthermore, when many groups use push polls not just to collect data, but to influence opinions, it's hard to blame the average respondent too much. In short, bad responses to survey questions could be a problem -- but that doesn't excuse the people collecting the data, and especially the media reporting it, from ignoring the issue. If they know the data's inaccurate, why do they keep reporting it?